Sentiments Stayed Weak On US Debt Ceiling Deadlock

Sentiments continued to be weighed down by the debt ceiling issue in US with DOW closing down 136.34 pts over night, back below the 15000 level at 14936.24. Though, Asian equities recoverd strongly after brief initial weakness. Treaury yields were steady with 10-year yields staying in tight range above 2.6% level. Dollar index continued to struggle in range above 79.63 temporary low is is back above 80 psychological level for the moment. In the currency markets, trading is rather quiet with the greenback struggle in range against other major currencies. Despite edging higher to day, there was no follow through buying in the Japanese yen as the currency retreated in late Asian session.

Talks of raising the US debt ceiling remained in a deadlock. President Obama reiterated that he would not consider conditions for a debt limit increase. He stated that the government would not "negotiate under the threat of economic catastrophe". Meanwhile, Republican House speaker Boehner stressed that he would not "pass a clean debt limit" as "the votes are not in the House to pass a clean debt limit". Both parties, however, reiterated that they do not expect a default. Regarding this, Treasury Secretary Lew warned that the House is "playing with fire" as failure to raise the US debt limit means "credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket".

in UK, the British Charmber of Commerce cheif economist Kern said that the UK upturn is "gathering momentum" And, "growth will continue, but it is likely to slow slightly following this recent spurt." However, he also warned that "external shocks from the US shutdown, possible debt default and tapering, and continued risks elsewhere in the world could all impact on our fragile recovery." Data from UK Saw BRC sales monitor rose 0.7% yoy in September. RICS house price balance improved further to 54% in September.

Elsewhere, Australian NAB business confidence improved to 12 in Setpember. Japan Eco watcher current sentiment improved to 52 in Setpmber. Swiss will release unemployment rate, retail sales and CPI today. Germany will release trade balance and factory orders. Canda will release housing starts and trade balance.